MANDELSON IN CHINA
Other newsletters are more partisan. One paper, on China’s refusal to cut aluminium production, is heavily sympathetic to Deripaska’s attempt to enter the market and contains critical coverage of the failure of rival Rio Tinto Zinc in another deal, which ended with the departure in January 2013 of its chief executive Tom Albanese. The briefing on Albanese’s sacking is interesting, given Wegg-Prosser’s and Mandelson’s close connections to Deripaska, Deripaska’s own company Rusal, and his interest in the aluminium company Alcoa. Albanese’s sacking was widely reported in the press and attributed to a bad deal in Mozambique. The briefing covers and analyses part of the information found in the Daily Telegraph and elsewhere.
The new information in the briefing paper talks of how China’s heavily state-subsidised aluminium production affects all commercial aluminium companies worldwide – including Russian interests. It provides a lot of detail but is basically a sophisticated rant about China using its nationalist self-sufficiency interests to have overcapacity, preventing ‘a new source of demand for western and Russian producers’:
By shielding Chinese producers from failure, or even from the sharp capacity cuts that producers in the US, Europe and Russia are undertaking to sustain profitability, the Chinese system is absorbing losses that are falling on private market players elsewhere. All the major global producers including Rusal, Rio Tinto Zinc, Alcoa and BHP Billiton have announced production cuts of between 6–8 per cent of their total aluminium production since mid 2011 and called a halt to or scaled back large capital projects.
A rather similar but more detailed analysis in another newsletter looks at the solar-panel trade wars between China, the US and the European Union. It is highly critical of China. Here again the row between the EU and the US about China subsidising production and China challenging EU subsidies for solar panels has all the makings of a trade war, and the pitch is aimed at European commercial producers fearful of Chinese subsidies.
The report warns,
The European solar industry arguably has bigger problems than China, in the form of its own changing subsidy regime and overcapacity problem. But Europe standing aside to allow Chinese goods to exacerbate the pain will fuel a deep neurosis in the EU about Chinese industrial competition and European policy passivity in the face of it. The fact that the Chinese system is wasteful and unsustainable and that its own internal debate on it is suppressed in an unhealthy way will not console anyone.
Curiously, this savage criticism of China postdates Mandelson’s losing one of his key Chinese contacts, the once-rising star, Bo Xilai, now jailed for life for bribery and corruption. Mandelson’s connections with Bo Xilai go back to a few weeks after he became EU Commissioner for Trade on 22 November 2004. On 24 February 2005 he arrived in Beijing for a four-day visit to hold talks with Chinese foreign trade officials, including Vice-Premier Wu Yi, Minister Bo Xilai and Chinese businesspeople. It was his first visit to China in his capacity as the Trade Commissioner. This meeting led to a series of detailed negotiations with the Chinese over textiles, and it is clear the two had a good working relationship.
In an interview with a Chinese news website12 on 25 February 2005 he describes Bo Xilai in glowing terms:
I find him a good interlocutor, a good person to do business with. We both had much more to say than we had planned. We met before during the EU–China Summit at the Hague in December 2004 and there’s so much going on internationally in the WTO and the Doha Round where China has an important part to play. I am glad he is exercising China’s responsibility as a leading member of the WTO … I regard Bo Xilai as a very able and very conscientious trade minister.
Nowadays, sources say if you ask him about Bo Xilai he says ‘Who?’
However, this is not the case with the Russian oligarchs. Mandelson has strengthened his position by joining the board of directors of Sistema, which is controlled by the billionaire tycoon Vladimir Yevtushenkov. The company has invested in major Russian oil firms, telecoms, radars and aerospace, and the mass media and healthcare sectors, among others.
In an interview with the Russian edition of Forbes, the oligarch indicated he was happy with the then impending return of Vladimir Putin to the presidency. ‘I’m an optimist. I don’t see any dramatic scenarios for my business in our country [Russia] whoever is in charge,’ he said. ‘We have worked with him [Putin] for a long time, we know him well and many of his traits impress us. I don’t see any threat to business – be it small, medium or large … I think the combination of wisdom built up over the years with analysis of the mistakes that have been made will allow Putin to make his third term a successful one.’
Yevtushenkov showed little sympathy for Mikhail Khodorkovsky, saying the oil tycoon – who clashed with Putin – fell prey to his ‘ambitions’ and was too politicised. ‘Business should be separate from politics,’ he said.
That has not entirely saved him, however, from Putin’s wrath. In September 2014 he was under house arrest over alleged money laundering charges. Bloomberg reported: ‘The accusations stem from a probe into the alleged theft of shares in oil assets in Russia’s Bashkortostan region in which Yevtushenkov’s AFK Sistema gained control in 2009, according to the Investigative Committee. Sistema called the accusations groundless and said it would to use [sic] all possible legal means to make their case.’
By November 2014 there were contradictory reports – one saying he had been released and another saying he was still under house arrest.
The list of 350 people who receive the newsletter suggests the Global Counsel has a number of other clients, some of them apparently employing them for specific advice on a particular problem.
One company, Betfair, an international betting firm based in the Gibraltar tax haven, admitted to Private Eye that it was a client. And, as the Eye commented, the firm was ‘facing tricky questions over licences in European countries such as Italy and Greece and for whom Mandelson’s experience as an EU trade commissioner must have looked attractive.’
Once Betfair confirmed its role, Global Counsel obviously made it clear through Benjamin Wegg-Prosser that the list was not all clients, and other firms refused to confirm whether they were.
The list includes a number of companies that seem to have multiple entries – suggesting they may well be clients. They include the banker JP Morgan, for whom Tony Blair acts as a consultant; Glencore, for whom Blair acted as a go-between to settle a dispute with the Qatari royal family; Vodafone; the drug firm Novartis; Nomura; the banker HSBC; the drinks group Diageo; Unilever; the insurer Prudential; the energy firms BP, Shell and E.ON; and the aluminium group Alcoa.
There are also some big players on the list including Sir Martin Sorrell of WPP, who we have seen owns part of Global Counsel; Jeff Tannenbaum, managing director of the Bank of America; and Jeffrey Rosen, managing director of Lazard. Others include Ken Costa, who runs the evangelical Christian Alpha courses and is a former chairman of Lazard International; and Jonathan Kewley, a corporate lawyer with Freshfields and a member of the Business, Innovation and Skills department’s professional and business services group.
In Whitehall recipients of the newsletter include Thea Rogers, adviser to Chancellor George Osborne; Martin Donnelly, permanent secretary at the business department; Nick Baird, UKTI chief executive; Sir Kim Darroch, David Cameron’s national security adviser; Moscow diplomat Denis Keefe; and the director of the European and global issues secretariat at the Cabinet Office, Angus Lapsley.
The political connections are more interesting, as they span the main two parties. On the list are shadow Chancellor Ed Balls; party chairman Douglas Alexander (twice through his office staff and on a private email); and shadow Education Secretary Tristram Hunt, who in 2013 praised Mandelson in Total Politics magazine: ‘Peter is … a force for progressive politics in Britain and around the world.’
Also, there are Liam Byrne, shadow Education Minister and a member of Policy Network with Mandelson; and Lord (Andr
ew) Adonis, shadow Infrastructure Minister. He is also linked via his researcher to former minister Pat McFadden. Former Labour MP and City spokeswoman, now a lobbyist with Portland, Kitty Usher is on the list. And Will Straw, son of Jack Straw and prospective Labour parliamentary candidate for Darwen, is also a recipient. He is linked to Mandelson through a project for the Institute of Public Policy Research and is also working for Ed Balls one day a week.
Jonathan Powell, who, as we have seen, is one of the key Blairite advisers and well connected to Blair’s businesses, is also on the list.
Mandelson’s list extends to Tories as well. Ed Vaizey, the Culture Minister, is a recipient as well as Zac Goldsmith, through his researcher. And so is Jo Johnson MP, brother of Boris and head of Cameron’s policy unit in No. 10.
Among Liberal Democrats who are on the list is Giles Wilkes at BIS, special adviser to Business Secretary Vince Cable. And there is one independent peer, Lord Owen, plus Mandelson’s long-term friend Lord Birt. Blair’s biographer, Anthony Seldon, the master of Wellington College public school, is there too.
However, checks with some of the people appear to suggest that the list is partly a vanity project – particularly among some politicians, one of whom said the newsletter ended up in his spam queue. None of the politicians contacted appeared to pay for it, while some of the business advisers did not seem to value its content much.
One said, ‘Basically, the information is not much more than you could get by an intelligent reading of The Economist. It joins up the dots and crosses the t’s, but it isn’t much more than that.’
Some of the advice also appeared plain wrong.
A document on future developments of the European Union says little more than Peter Mandelson’s known pro-EU position says in public with a lot more detail of how it is justified. And, if Global Counsel were so well connected, it would have realised that the strength of Eurosceptism was much more powerful inside the Conservative Party than it suggests in the briefing. This is paralleled by the list of subscribers. It is not going to known Eurosceptics such as Chris Grayling and Theresa May, and therefore has no feedback from them.
Written prior to Cameron’s commitment to an in/out referendum on Britain’s EU membership and the EU budget settlement, it warns of bad relations between Britain and the EU. It falsely predicts that Britain won’t be able to get a budget settlement that limits the growth in EU spending, and talks about the EU wanting a new treaty when in fact it decided to create a stronger eurozone without one.
But Global Counsel’s view on the referendum announcement is to quote what must be a minority of Tory ministers, to the effect that a referendum would be ‘divisive and suicidal for the Conservative Party’. In fact, the Tories are now committed to one, and this issue has been overtaken by the rise of the United Kingdom Independence Party (UKIP) alongside the issue of whether Cameron should recommend that Britain quit the EU if he does not get what he wants.
It also predicts – and this is still to be settled – that in the end Britain will be disadvantaged if it does not become part of the eurozone for the simple reason that banks that trade in large euro-denominated positions will want to be backed by the European Central Bank as part of the eurozone rather than the Bank of England. Altogether the drift of the argument is that, in the end, London’s big banks will decide that it is more logical to be located in the eurozone than in the sterling area and will leave the City.
What is clear from Mandelson’s business interests, which may not rival those of Blair, is that, by linking to both pro-Putin oligarchs and getting the financial backing of WPP, he has been able to make himself rich. He has also added a portfolio of clients to tackle specific issues – such as Betfair – and also, as revealed in the Guardian, got involved with a dispute over APP and the destruction of the rainforest.13
APP is a controversial Chinese–Indonesian company owned by the Wijayas, a rich dynasty. In 2012, APP had come under growing pressure after it was accused of illegal logging in Indonesia and damaging the habitats of rare animals such as the Sumatran tiger. A year-long Greenpeace investigation, published in March, alleged that endangered trees, known as ramin, have been chopped down and sent to factories to be pulped and turned into paper. The trees grow in peat swamps in Indonesia, where the dwindling number of surviving Sumatran tigers hunt.
Greenpeace alleged that it found ramin logs in a paper mill belonging to APP on nine occasions over a year. Chopping down ramin trees, a protected species under an international treaty, has been illegal under Indonesian law since 2001. Wood from the rainforests is being turned into everyday products around the world, such as photocopying paper, tissues and paper packaging, according to Greenpeace.
APP, part of the Sinar Mas conglomerate, denied any wrongdoing, saying in a statement that it ‘maintains a strict zero-tolerance policy for illegal wood entering the supply chain and has comprehensive chain of custody systems to ensure that only legal wood enters its pulp mill operations. APP’s chain of custody systems are independently audited on a periodic basis.’ It said it welcomed the Greenpeace report, as it would help ‘identify and act on any weaknesses in its chain of custody systems.’
Three large companies said that they were going to stop buying paper products from APP, either forever or until they were satisfied that the products were being produced sustainably. At least sixty-seven companies worldwide, such as Tesco, Kraft Foods and the office suppliers Staples, had boycotted APP since 2004, according to a Greenpeace list produced at the time.
In response to the allegations, Global Counsel said, ‘Global Counsel are advising APP on how to ensure that the new voluntary partnership agreement on legal and sustainable timber trade between the European Union and Indonesia is a success … As companies in emerging economies grow across the globe meeting high European and American standards is one of their key challenges.’
Since then, Mandelson contacted Zac Goldsmith, the Conservative MP for Richmond, who has high-level connections with environment campaigners, and was able to broker a deal between Greenpeace and APP to protect part of the Indonesian forest. This is still being monitored. But, again, this appeared to be a one-off arrangement.
In 2010 Mandelson moved to an upmarket property inside Regents Park, which he bought for a staggering £7.6 million in his own name. He obtained a mortgage from HSBC Private Bank – a lender favoured by the wealthy; Francis Maude, the Tory Cabinet Office minister and ex-banker, has a similar mortgage. In January 2015, estate agents Zoopla estimated the property to be worth £11.483 million – no wonder Mandelson appeared on BBC Newsnight in January 2015 to condemn Labour’s new mansion tax, levied on all properties over £2 million.
The home is among an exclusive group of buildings in the park and boasts a wine cellar, a two-storey atrium, elegant reception rooms and views directly onto a park. A conservatory extends into the large, landscaped garden and the master bedroom occupies the entire second floor. There are three bathrooms and two dressing rooms. In 2014, he was able to rent a renovated detached house in Wiltshire from his friend Nat Rothschild so he could enjoy the country life close to Rothschild’s estate.
Benjamin Wegg-Prosser has certainly moved up in the world as well. On 5 March 2012 he moved into a Georgian, Grade II-listed, three-bedroom home round the corner from Tony Blair in Connaught Square in London. According to the Land Registry, he paid £1.925 million for the home and took out a mortgage from Barclays. The property had been on the market through Cluttons for £1,999,995. This property’s value has risen more modestly, with Zoopla estimating it to be worth £2.64 million in January 2015.
But neither compares to the wealth of the Blairs and neither has quite the scope to rival Blair’s business interests – probably because the name Blair still counts in the American sphere of influence for much more than Mandelson does in the world of Vladimir Putin.
Notes
1 Daily Telegraph, 17 December 2011: http://www.telegraph.co.uk/
news/politics/8963427/Lor
d-Mandelson-courted-
Mubaraks-dying-regime.html
2 The Guardian, 2 July 2014: http://www.theguardian.com/
politics/2014/jul/02/tony-blair-advise-egypt-
president-sisi-economic-reform
3 The Guardian, 2 October 2011: http://www.theguardian.com/
politics/2011/oct/02/peter-mandelson-asia-business
4 Independent on Sunday, 13 January 2008: http://www.independent.co.uk/
news/uk/politics/secret-nuclear-
talks-held-at-no-10-769989.html
5 The Guardian, 2 October 2011: http://www.theguardian.com/
politics/2011/oct/02/peter-mandelson-asia-business
6 Ibid.
7 Mail on Sunday, 26 October 2008: http://www.dailymail.co.uk/
news/article-1080660/Use-Ferrari-Mandy-
told-Rothschild-Klosters-holiday.html
8 Daily Telegraph, 25 January 2012: http://www.telegraph.co.uk/
news/politics/9036927/Nathaniel-Rothschild-says-sauna-
with-Lord-Mandelson-was-purely-pleasure-not-business.html
9 Independent, 11 February 2012: http://www.independent.co.uk/
news/uk/home-news/rothschild-loses-libel-case-and-
reveals-secret-world-of-money-and-politics-6720015.html
10 Daily Telegraph, 10 February 2012: http://www.telegraph.co.uk/
news/politics/9073717/Nathaniel-Rothschild-
loses-High-Court-libel-battle.html
11 Financial Times, 18 November 2012: http://www.ft.com/cms/s
Blair Inc--The Man Behind the Mask Page 20
